Although most consumers rely on checking accounts, credit cards or debit cards to pay for the goods or services they purchase, many consumers lack the financial resources, credit worthiness or financial discipline to qualify for, afford, or maintain such financial services. For example, some individuals consciously avoid establishing checking accounts and the like because of an actual or perceived inability to accurately track the account balance and to avoid overdrawing the account. Such individuals may also lack the resources to maintain a sufficient balance in a checking account to avoid a monthly service charge or wish to avoid the high interest rates charged by many credit card companies. Without access to these financial services, such individuals must generally rely on cash to pay for the goods and services they utilize.
Having to rely solely on cash presents its own problems, in particular, safekeeping of the cash, the temptation to spend the cash on hand, and concerns about theft of any cash sent through the mail to pay bills. Some banks and financial institutions do offer “low cost” or “basic” savings accounts. Such financial institutions usually restrict services, offer “lower” fees, and may waive minimum balance requirements. However, such low cost accounts remain unappealing to many members of the cash based society because they tend to be offered through bank branches with limited hours and locations and ATMs which may not be local to the consumer. Furthermore, there is usually a credit check and an approval process associated with “low cost” accounts, which the cash based consumer might fail because of credit history or residence problems. In addition, the cash based consumer may be worried about garnishments or inconvenient service.
Some financial institutions offer debit card payroll solutions. For example, a branded check printing service may provide direct deposit capabilities for federal benefit checks in exchange for a transaction fee. However, federal benefit check distribution services do not allow multiple withdrawals in varied amounts. Transaction fees for these and other debit card payroll solutions tend to be expensive. There is currently no other banking service offered to the cash based society that provides direct deposit capability. In addition, such debit card accounts typically require use of a personal identification number to access funds associated with the debit card account to prevent unauthorized access to the account and unauthorized disbursement of the funds in the account. Although use of the personal identification numbers affords greater account security, many consumers avoid use of debit cards, simply because of the difficulty and inconvenience of having to remember their personal identification number along with all of the other passwords, access codes and numbers one typically has to remember.
Individuals may avoid the above-described drawbacks associated with traditional banking relationships by conducting business with Licensed Money Transmitters or entities that issue money orders. An example of a Licensed Money Transmitter is Western Union. A Licensed Money Transmitter is legally authorized to transmit funds, either by wire, facsimile, electronic transfer, courier or otherwise, within the United States or to or from locations outside the United States. A Licensed Money Transmitter may also be authorized to sell or issue checks, drafts, warrants, money orders, traveler's checks or other negotiable instruments. In some instances, a Licensed Money Transmitter may even be authorized to sell and/or exchange currency. Unlike traditional bank transactions, however, transactions handled by a Licensed Money Transmitter are not insured by the FDIC. Using a Licensed Money Transmitter, a customer can pay an agent of the Licensed Money Transmitter a selected monetary amount plus a transaction fee in exchange for a negotiable instrument payable to an entity to which the customer owes money and payable by the Licensed Money Transmitter. Using a money order or the like, the user can obtain negotiable instruments to mail to creditors instead of mailing cash. However, use of money orders does not solve the individual's problem of safekeeping his cash until needed and avoiding the temptation to spend the cash on hand.
Accordingly, there remains a need for a financial service that offers safe-storage of and access to funds, direct deposit capabilities, automated teller machine (ATM) access, convenient service points, etc, without requiring a traditional bank-customer relationship.